Regulation: Omnibus I — Directive (EU) 2026/470  |  Published: EU Official Journal, February 2026  |  In Force: 18 March 2026

The EU has formally simplified its two flagship sustainability regulations — CSRD and CSDDD — through the Omnibus I Directive. Thresholds are significantly raised, due diligence obligations are narrowed, mandatory climate transition plans removed, and the EU civil liability regime abolished. This article covers every material change and what it means for your compliance obligations.

At a Glance — Omnibus I Key Changes
Narrower Scope. Higher Thresholds. Decentralised Enforcement.
CSRD: 1,000 employees + €450M turnover  |  CSDDD: 5,000 employees + €1.5B turnover  |  EU civil liability: abolished  |  Climate transition plans: no longer mandatory


Background

Why the EU Reformed CSRD and CSDDD

Since the European Green Deal era, EU institutions introduced overlapping sustainability reporting and due diligence frameworks that — while well-intentioned — created significant operational complexity. Companies simultaneously faced the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), ESRS reporting standards, third-party assurance requirements, and supply-chain mapping obligations across all supplier tiers.

The Omnibus I package — formally adopted by the EU Council on 24 February 2026 and published as Directive (EU) 2026/470 — represents a strategic recalibration: preserving ESG principles while significantly reducing compliance burdens, particularly for mid-sized companies.

ℹ️ Three objectives of the reform:
(1) Preserve environmental and human rights protections  |  (2) Reduce disproportionate compliance burdens on business  |  (3) Strengthen EU industrial competitiveness globally


Key Changes — Before vs After

CSRD and CSDDD: Old vs New Thresholds

Area Before Omnibus I After Omnibus I (EU 2026/470)
CSRD scope 250+ employees OR €40M turnover (large companies); plus phased inclusion of listed SMEs 1,000+ employees AND €450M net annual turnover
CSRD — listed SMEs (Wave 3) Required to report for FY starting 1 Jan 2026 Requirement removed entirely
CSRD — non-EU companies €150M+ EU turnover €450M+ EU parent turnover OR €200M+ via EU subsidiary/branch
CSDDD scope 500+ employees AND €150M global turnover 5,000+ employees AND €1.5B global net turnover
CSDDD due diligence scope Full value-chain mapping across all supplier tiers Risk-based — direct business partners + high-risk indirect partners only
Climate transition plan Mandatory — aligned with EU 1.5°C and 2050 neutrality targets Removed — voluntary only, not legally enforceable
Civil liability Harmonized EU-wide civil liability framework Abolished — Member State-specific regimes apply
Administrative penalties Up to 5% of global turnover Capped at 3% of global turnover


CSRD Changes

Corporate Sustainability Reporting Directive (CSRD) — Detailed Changes

Significantly Raised Reporting Thresholds

The most impactful change: CSRD reporting now requires both conditions to be met — 1,000+ employees AND €450M+ net annual turnover. Previously, large companies meeting either the 250-employee OR €40M turnover threshold were covered.

This change removes a large number of mid-market companies — particularly those below 1,000 employees — from mandatory CSRD reporting.

Wave 1 Transition Exemption

⚠ Important for Wave 1 companies: Companies that started CSRD reporting from financial year 2024 but now fall below the new thresholds benefit from a transition exemption for FY2025 and FY2026. If your company had 250–1,000 employees and was preparing for phased CSRD compliance, verify your position against the new thresholds immediately.

Wave 3 (Listed SMEs) — Requirement Removed

Publicly listed small and medium-sized enterprises that were required to publish their first sustainability report for financial years starting on or after 1 January 2026 are now fully exempt. This obligation has been removed under Omnibus I.

Non-EU Parent Companies

Foreign multinationals are captured only if they generate €450M or more in EU turnover at the parent level, or €200M or more through EU subsidiaries or branches. This substantially reduces the number of non-EU companies automatically in scope.


CSDDD Changes

Corporate Sustainability Due Diligence Directive (CSDDD) — Detailed Changes

Narrower Applicability — Only Very Large Companies

CSDDD now applies exclusively to companies exceeding 5,000 employees AND €1.5B global net turnover. This is a tenfold increase in the employee threshold from the original 500-employee scope.

Risk-Based Due Diligence — Not Full Value-Chain Mapping

The previous requirement for exhaustive value-chain mapping across all supplier tiers is replaced by a focused, risk-based approach. Companies must:

  • Identify actual or likely adverse human rights and environmental impacts
  • Prioritise direct business partners and high-risk indirect partners
  • Implement proportionate mitigation measures

This eliminates the expectation that every tier-2 and tier-3 supplier be individually assessed.

Mandatory Climate Transition Plans: Removed

⚠ Significant change: The binding requirement to adopt a climate transition plan aligned with the EU’s 1.5°C Paris Agreement target and 2050 neutrality goal has been removed from CSDDD. Companies remain free to pursue voluntary climate planning, but it is no longer a legal obligation enforceable under EU law.

Civil Liability and Penalties

The EU-wide harmonised civil liability framework has been abolished. Companies now operate under their respective Member State liability regimes, significantly reducing cross-border litigation exposure. Administrative penalties remain possible but are now capped at 3% of global turnover (down from 5%).


Implementation Timeline

When Do the Changes Apply?

  • 24 Feb 2026
    EU Council AdoptionOmnibus I formally adopted by the Council of the European Union.
  • 18 Mar 2026
    In Force — NowDirective (EU) 2026/470 entered into force 20 days after publication in the EU Official Journal.
  • 19 Mar 2027
    CSRD Transposition DeadlineMember States must incorporate CSRD amendments into national law by this date.
  • 26 Jul 2028
    CSDDD Transposition DeadlineMember States must transpose CSDDD amendments into national law.
  • 26 Jul 2029
    CSDDD Compliance BeginsCorporate compliance obligations under the revised CSDDD begin.
  • 1 Jan 2030
    First CSDDD ReportsFirst CSDDD reports cover financial years starting on or after 1 January 2030.


Industry Impact

What This Means by Sector

Automotive & Manufacturing

Large OEMs remain in CSDDD scope. Lower-tier suppliers below the 5,000-employee threshold face reduced mandatory due diligence pressure — but OEM contract requirements may still demand ESG disclosures.

Chemicals & High-Risk Industries

Risk-based due diligence means chemical supply chains remain high-priority targets for CSDDD review — even if your company falls slightly below the threshold. Buyer-driven ESG requirements persist.

Financial Services

Reduced corporate CSRD reporting may impact ESG data aggregation, ratings models, and the quality of sustainable finance disclosures. Investor expectations remain high regardless of regulatory scope.

Mid-Market & SMEs

The biggest beneficiaries of Omnibus I. Companies between 250–1,000 employees are no longer mandated to report. Wave 1 companies below the new threshold have a 2025–2026 transition exemption.

✅ Strategic note: While regulatory obligations are reduced, investor, customer, and procurement requirements for ESG data remain strong. Companies that voluntarily maintain ESG transparency will retain a competitive advantage in global markets — especially with US and Asian buyers who have their own ESG expectations.
Need Help Reassessing Your ESG Compliance Position?

Our compliance specialists can help you determine whether Omnibus I changes your reporting obligations under CSRD and CSDDD — and how to adjust your governance framework accordingly.

Explore ESG Compliance Services

Conclusion

Omnibus I is not deregulation — it is recalibration. The EU has chosen to narrow the scope, raise the thresholds, and decentralise enforcement of its two flagship sustainability regulations. For many mid-market companies, mandatory obligations are reduced. For large companies above the new thresholds, CSRD and CSDDD remain substantive commitments.

The extended CSDDD timeline — compliance from July 2029, first reports from FY2030 — provides room to reassess, but not to stop. Investor expectations, supply-chain contract requirements, and voluntary ESG commitments mean sustainability governance remains a strategic priority regardless of regulatory status.


Frequently Asked Questions

CSRD & CSDDD Omnibus I — FAQ

What is the new CSRD threshold after Omnibus I?
CSRD now applies to companies with more than 1,000 employees AND more than €450 million net annual turnover. Both conditions must be met. Listed SMEs (previously Wave 3) are fully exempt.
What is the new CSDDD threshold after Omnibus I?
CSDDD applies only to companies with more than 5,000 employees AND more than €1.5 billion in global net turnover — a significant increase from the original 500-employee threshold.
When does Omnibus I enter into force?
Omnibus I (Directive EU 2026/470) entered into force on 18 March 2026. CSRD national transposition is required by 19 March 2027; CSDDD by 26 July 2028.
Are Wave 1 CSRD companies that now fall below thresholds still required to report?
Companies that started reporting from FY2024 but fall below the new thresholds receive a transition exemption for FY2025 and FY2026. They should verify their position against the new 1,000-employee and €450M turnover thresholds.
Has the mandatory climate transition plan been removed from CSDDD?
Yes. The binding requirement to adopt a climate transition plan aligned with the EU 1.5°C target has been removed from CSDDD under Omnibus I. Voluntary climate planning continues but is not legally enforceable.
When must companies comply with the revised CSDDD?
CSDDD compliance begins 26 July 2029. The first CSDDD reports will cover financial years starting on or after 1 January 2030.

Source: CSRD and CSDDD Update

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